He’s behind a Saatchi project called DOT – do one thing – that is inspired by the PSPs – personal sustainability projects – that he helped bring to Wal-Mart. Wal-Mart encouraged its 1.3 million employees to integrate sustainable practices into their lives by making small changes to their everyday habits. Many thousands have stopped smoking, lost weight, recycled more, or biked or walked to work.

Is this the way to curb climate change, stop the loss of biodiversity, save tropical forests and the like? Or do people screw in a CFL bulb and then figure they’ve done their part?

Werbach argues that small steps lead to big things. “Change begets change,” he says. “Recycling and energy conservation—once you start remembering to do that, you’re remember to do other things.”

Werbach spoke the other day at the Net Impact conference at Cornell University, and he drew a big crowd. Net Impact is a group of business students and young professionals who want to use the power of business to make the world better. [Disclosure: I’m a new member of the Net Impact board.] The conference attracted more than 2,400 people to Ithaca, N.Y., in November in the midst of a recession–no small accomplishment.

The crowd may have showed up because Werbach is a controversial. His green friends went after him when he joined forces with Wal-Mart. He appeared on the cover of Fast Company in 2007 beside the headline “He Sold His Soul to Wal-Mart.” (Fortunately, the story was kinder.) But even now, he begins his talk by explaining why he gave a speech in 2004 called “Is Environmentalism Dead? [PDF], left the Sierra Club and opted to work in the corporate world.

Reasonable people will differ about those assertions (except, perhaps, for the one about beer, which is inarguable). But until recently, most socially responsible mutual funds—funds designed to appeal to people who want their portfolio to reflect their mostly liberal values—screened out companies that provided nuclear energy, manufactured weapons or brewed beer. As for Wal-Mart, forget about it.

That’s changing, and it’s about time. Calvert Investments, a leader in social responsibility investing (SRI), has introduced new funds that—are you sitting down?—own shares in oil and mining companies, in a utility that sells nuclear power and in Wal-Mart. [click to continue…]

Wal-Mart will make a big announcement this week: The company, working with consumer-goods manufacturers and a group of universities, will unveil plans to measure the sustainability of every product it sells. In time, sustainability labels could provide us with information about the environmental and social attributes of consumer goods, much as nutrition labels tell us about the content of the foods we eat.

I’ve been hearing about Wal-Mart’s sustainability index for about a year, but the company has been reluctant to discuss it. (Uncharacteristically so, in my experience.) Wal-Mart’s new CEO, Mike Duke, will announce the index on Thursday, July 16, at the company’s corporate headquarters in Bentonville, Arkansas, before invited suppliers, environmentalists and academics. I’ve been able to piece together the story by talking to Wal-Mart insiders, academics who are working with the company and environmentalists. The Big Money, Slate’s business site, has just published the story here.

Whatever you think of the people at Greenpeace, you’ve got to admit they are environmentalists with a sense of humor. Recently, Greenpeace published a scorecard that ranks supermarket chains on the sustainability of their seafood. It’s a serious analysis, intended to guide shoppers to those stores that recognize their responsibility to protect the oceans, and to pressure those stores that don’t. In the argot of activists, this is known as a “name ‘em and shame ‘em” strategy.

Then Greenpeace went a step further. It ridiculed Trader Joe’s, the national supermarket chain with the lowest ranking, by creating a website called Traitor Joe’s (“Your one-stop shop for ocean destruction”), producing an amusing video (below and at www.traitorjoe.com) and sending protesters dressed as Orange Roughy to a Trader Joe’s outlet in San Francisco, calling on the company to clean up its act.

While these tactics might not be well suited for, say, the World Resources Institute, the diversity of the environmental movement is a wonderful thing. Activists at groups like Greenpeace, Rainforest Action Network or Friends of the Earth function, in essence, as the business development arms of the more collaborative, mainstream groups like the Environmental Defense Fund or Conservation International. Companies under attack from Greenpeace or RAN often ask EDF or CI to help them dig out of trouble.

Much as I’m an admirer of Wal-Mart’s ambitious sustainability goals, and its efforts to achieve them, there’s a glaring problem with the company’s “progress” to date that can be seen in the chart below.

When it comes to climate change–the defining environmental issue of of our era—Wal-Mart is moving in the wrong direction.

As Gwen Ruta of the Environmental Defense Fund, a Wal-Mart partner, writes in her frank assessment of the company’s 2009 sustainability report, the problem is that all the good things that Wal-Mart is doing–increasing its use of renewable energy, driving efficiency in individual stores, improving its fleet operations and pushing up its recycling rate–are offset by the fact that the company is adding more stores and selling more stuff.

So although WMT’s greenhouse gas emissions per unit of sales is decreasing (the bars on the right), its overall carbon footprint is growing (the bars in the middle).[click to continue…]

What are you wearing? Where did it came from? How much energy went into it? How much pollution was generated by its production and shipping?

You almost surely don’t know, and you may not care, but brands and retailers are digging deep into their supply chains to better understand the environmental and social impact of the things they make and sell. This is an emerging trend in business that goes by the name of traceability or supply chain transparency. It requires companies to understand the full depths of their supply chains much better than most do. Companies getting serious about traceability include Patagonia, Wal-Mart, Tesco and Gap. More are sure to follow.

“If you don’t know where your stuff is coming from. how can you have a sustainability program?” asks Tim Wilson, the CEO of a British company called Historic Futures that specializes in traceability.

Tim talked about traceability on a panel that I moderated at FORTUNE’s Brainstorm Green conference about business and the environment. He was joined by Mike Kowalski, the CEO of Tiffany & Co., Kathy Abusow of the Sustainable Forestry Initiative, Jill Dumain of Patagonia, Arlin Wasserman of Sodexo and Jeremy Moon, the CEO of Icebreaker. Icebreaker is a fascinating company that makes clothing from New Zealand merino wool and invites customers to trace their garments back to the farmers who raised the sheep that made it—using a (Get it?) Baacode. Very cool, and here’s the Icebreaker story.

From the composition of that panel, you can see that traceability crosses diverse industries—jewelry, wood and paper, food and clothing. In every case, the goal is to de-commoditize commodities—that is, to distinguish between gold mined under safe conditions in the U.S. and gold mined by children in Africa, or between wood that is harvested sustainably and wood that has been illegally logged. Fortune.com just published a brief story that I did about traceability. Here’s how it begins:

Laguna Niguel, Calif. — Where was the cotton in your shirt grown? Who mined the gold in your wedding ring? What forest produced the paper in the magazine you are reading?

You almost surely don’t know, but a growing number of brands and retailers want to dig deep into their supply chains to better understand the roots (sometimes literally) of the products they sell. Their goal: to avoid risks and enhance their reputation as “green” business leaders, says Tim Wilson, the 41-year-old CEO of Historic Futures, a little British company that is riding a big idea in sustainability, known as traceability.

Using Internet-based systems and RFID tags, Historic Futures tracks such commodities as cotton and gold through the long and previously opaque supply chains of Wal-Mart, Gap, and Patagonia, among others.

Patagonia has done a terrific job of explaining traceability to the public on a website called The Footprint Chronicles. (That’s a graphic from the site below.) The Environmental Defense Fund spotlighted the work done by Patagonia in its 2009 Innovations Review, which I helped EDF to write. EDF also highlighted Wal-Mart’s Love, Earth line of jewelry—which promises customers that the gold and silver jewelry they buy has been mine and produced responsibly.

Here is a link to the EDF report about traceability, headlined Shining a Spotlight on the Supply Chain. Here’s a link to EDF’s account explaining how Wal-Mart created its Love, Earth line of jewelry, with the help of Historic Futures. Another example of traceability: Wal-Mart and Tesco have vowed not to buy clothing made with cotton farmed in Uzbekhistan, where child labor is rampant, requiring them to ask all their suppliers to know where their cotton is sourced.

Traceability isn’t a new idea, of course. We couldn’t have organic food or Fair Trade coffee or salmon certified by the Marine Stewardship Council without transparent supply chains that track goods from the store shelf back to the farm or fishery. But judging from the crowd at our Brainstorm Green panel on traceability, you’ll be hearing more about it in the years ahead.

Mike Duke, who has been chief executive of Wal-Mart Stores for just three months, is getting a lot of attention in the blogosphere. It’s not the kind of attention a new CEO wants.

“Shameful, bigoted and discriminatory” is the headline over one blog post about Duke.

Why? Because, it turns out, Duke signed a petition last year that put an initiative known as Act 1 on the ballot in his home state of Arkansas. The controversial initiative says that only married couples may become adoptive or foster parents in the state, closing the door for same-sex couples. It passed in November with 57 percent of the vote.

Mr, Duke, what on earth were you thinking?

Needless to say, this is unwelcome news for Wal-Mart, the world’s biggest retailer, and it’s especially hurtful to the company’s gay employees. Wal-Mart has struggled in recent years to figure out how to deal with LGBT (lesbian, gay, bisexual and transgender) issues. It supported an employee group called Wal-Mart Pride, which triggered a backlash, which subsequently caused the company to pull back its support for national gay-rights group. (See my 2007 FORTUNE.com column headlined Wal-Mart shuns gay groups.) More broadly, Wal-Mart has worked hard and for the most part effectively to position itself as a good corporate citizen as it tries to expand from its rural roots into urban, liberal areas. This will be a setback.

News that Duke had signed the petition caught the company flat-footed. When I asked a Wal-Mart spokesman for a comment, I got this response and no more:

I can confirm that Mr. Duke did sign the petition. Also, Wal-Mart did not take a position on the ballot initiative.

I learned from a source inside Wal-Mart that Duke was going to meet with the Wal-Mart Pride group to talk about the issue. (Note to Wal-Mart employees—feel free to let me know how that meeting went by email at marc.gunther@gmail.com.) A gay employee told me that he hopes that this incident will be a catalyst for positive change.
The story of how Duke’s name came to light—you can see a photocopy of the petition sheet (PDF) here—is the latest illustration of how digital media is exposing corporate and individual behavior.

Last week, a gay rights group i called KnowThyNeighbor.org posted online the names of the 83,000 Arkansas citizens who signed the petition, in a searchable database. The petitions are public records.

KnowThyNeighbor.org had previously published names of more than 500,000 people who signed anti-gay petitions in Massachusetts and Florida. In a press release about the Arkansas outing (my word), Tom Lang, the group’s director, says:

These petition signers need to stand behind their signatures and be responsible for this dehumanizing attack on the gay community. It’s disgraceful that they have chosen to exercise their prejudice at the expense of children who are now being denied access to loving adoptive and foster parents.

Lang urges family members, friends, co-workers and customers of those who signed the petition to confront them:

These conversations can be uncomfortable for both parties but they are desperately needed. The more that gays and lesbians talk about the importance of their relationships and their love for their children, the faster stereotypes break down and both sides begin to realize how much they have in common.

Two days later, a reader identified as Concerned Arkansas Citizen posted a comment:

One VERY prominent person in Arkansas that has signed the petition is Michael Duke of Rogers, AR. He is the new CEO of Walmart Stores, Inc. He should explain himself.

By Monday, gay and liberal bloggers like Queerty and Daily Kos were running with the story and gettings lots of comments. Who says bloggers never dig up news?

For what it’s worth, Wal-Mart got a 40% rating in 2008 on the Corporate Equality Index published by the Human Rights Campaign, the nation’s biggest LGBT advocacy group. Target, a rival, got a 100% rating and Costco got a 93% rating.

Ellen Kahn, Director of the Human Rights Campaign’s Family Project, sent me this comment by email:

When Mike Duke voted in favor of ACT 1…he essentially closed the door to a hopeful future for the hundreds of children in Arkansas’s foster care system…Duke should think about the real lives of these kids and show some compassion.

Duke’s defenders including Jerry Cox, director of the Arkansas Family Council, who called it an invasion of privacy to publicize the names of citizens who are exercising their right to petition the government, according to the Arkansas Times. What’s more, he wrote, many voters will sign any petition based upon “one simple principle: that the people, whenever possible, have the right to vote on issues that could directly impact their lives.”

I’m not persuaded. Duke chose to sign a petition, which is a public document, so how has his privacy been invaded? What’s more, if you believe, as I do, that equality for LGBT people under the law is a civil rights issue, then there’s no reason to put it up to a popular vote.

At the very least, Duke’s decision to sign the petition reflects poor judgment. As a senior executive of Wal-Mart, he should have known that supporting a controversial measure widely seen as anti-gay could boomerang. (The Arkansas Democrat and Gazette called Act 1 “just another exercise in stirring up bad feelings.”) Duke has alienated LGBT customers and their allies, as well many of his own employees.

And if Duke figured that no one would ever know, well, that wasn’t very smart either. Several years ago, the writers Don Tapscott and David Ticoll wrote a book about transparency in business aptly called The Naked Corporation. There are few secrets these days in corporate America. CEOs (and future CEOs) need to pay close attention to how they behave—on and off the job.

The two most influential companies in America, I’d argue, are GE and Wal-Mart. GE has clout because of the respect accorded its managers, even after a tough run under Jeff Immelt. Wal-Mart matters because of its scale, meaning that most everyone in the consumer products business wants to do business with Wal-Mart. Both have wrestled seriously the idea of sustainability in the last few years. I never tire of writing about either company.

You’ll get lots of arguments about Wal-Mart, but I think the company has changed dramatically for the better under Lee Scott, who announced last month that he is stepping down as CEO. The company engaged with its critics, took a systematic look at its environmental impact and began an ambitious and far-reaching effort to become more sustainable. Its impact is felt in unexpected places. Did you know, for example, that Wal-Mart has taken on the repressive government of Uzbekhistan over the issue of child labor? I’ve taken an anecdotal look at a few of Wal-Mart’s initiatives in today’s Sustainability column.

Here’s how the column begins:

Children who are forced to pick cotton in Uzbekistan, farmers scratching out a living in Guatemala and salmon fishermen in Bristol Bay, Alaska, would not seem to have much in common. But all are feeling the global impact of Wal-Mart.

As the world’s largest retailer, with $379 billion in revenues last year, Wal-Mart has long been a powerful force in the global economy – a bully, its critics would say. For years, they assailed Wal-Mart for squeezing suppliers over costs, driving mom-and-pop stores out of business or crushing efforts to organize its workers.

These days, though, the company is winning praise for using its leverage – that’s a polite term for bullying – to protect the environment and help the poor.

The more people I meet who work Wal-Mart, and the more I talk with the company’s critics and partners, whether from environmental NGOS or socially-responsible investment funds–and their role as agents of change is vital–the more I am convinced that Wal-Mart is thinking expansively and creatively about its responsibility.

Wal-Mart’s sustainability efforts are leading to some unorthodox conversations inside the retail giant. Consider meat and bottled water—some workers at Wal-Mart have promised to eat less meat and drink less bottled water as part of their “personal sustainability projects” because both are bad for the environment. More than 18,000 Wal-Martians have pledged to quit smoking as part of their PSPs, which are being promoted out of Wal-Mart’s home office in Bentonville. You see the contradiction, don’t you? Wal-Mart sells lots of meat, bottled water and cigarettes. So it’s asking its workers to stop buying stuff that it’s selling in vast quantities to its customers.

According to Rand Waddoups, who is Wal-Mart’s senior director of strategy & sustainability, this can be awkward for the company buyers in charge of meat, bottled water and tobacco. Traditionally, it’s the goal of buyers to drive sales in their category. But Waddoups tells me, “Wal-Mart doesn’t want to increase the sales of tobacco. So if you are the guy whose job is to increase sales and profits in tobacco, that’s hard place to be.”

“Maybe not all of our buyers should be increasing their sales and profits,” he muses. Instead, they are lobbying for change. The company’s bottled water buyer, he says, has been encouraging suppliers to use less plastic in their bottles. The buyer is also thinking about selling water to people who could refill their own containers. Similarly, meat buyers are “doing some really neat things about decarbonizing their supply chain,” Waddoups says. “They’re improving what they can, and they are getting excited about other alternatives.”

I spoke to Waddoups last week as part of a series of calls on Leadership and CSR that I’ve been hosting for Net Impact, a nonprofit association of young business leaders who want to use business to improve the world. You can listen to my conversation with Waddoups here.

Rand has been at WMT for eight years. We met last spring at the Milken Institute’s global conference, and enjoyed a dinner together. An MBA from the University of Arkansas, Rand started at Wal-Mart as a merchant, which means he had to buy, price, promote and place products. “My responsibility was ice. Frozen water. I increased sales and profits,” he recalls. He moved into strategy and sustainability a couple of years ago, and clearly has a passion for the work.

The economic downturn, slump, recession or whatever you choose to call it has not slowed down Wal-Mart’s sustainability work at all, he says: “There’s been no better time to apply sustainability than when times are tough. It is absolutely in line with the everyday low price philosophy.”

So Wal-Mart is pushing ahead on multiple fronts. A couple of initiatives in particular excite Rand—a summit in China later this month when CEO Lee Scott and other Wal-Mart execs will pull together about 1,000 suppliers to talk about sustainability. I’d expect that Wal-Mart will move forward then with a “sustainability scorecard” that it plans to use to rate all of its suppliers, as a way to persuade them to reduce their own energy usage, emissions and waste. Scott told me last spring that he also wants to use the summit to reinforce the message that Wal-Mart intends to seriously enforce labor standards at supplier factories around the world.

Rand also said he’s excited about Wal-Mart’s “zero waste” goal. This will take years to accomplish, of course, but already Wal-Mart is throwing away a lot less and recycling more. The people who run its TLE (that’s Tire Lube Express) operations are recycling used motor oil, oil and air filters, oil bottles, etc. The company wants to find ways to turn more of its food waste into compost. It’s reducing packaging, as has been widely reported.

Wal-Mart is so big that it doesn’t even know how much stuff it is throwing away, in total. “One of our greatest struggles is to know where we are,” Rand says. But here’s compelling evidence of progress: In 2006, Wal-Mart’s trash was an expense because the company had to pay haulers to take most of its away. This year, it is a revenue item because it makes more from selling recyclables than the cost of sending waste to landfills. “On the whole now, WMT makes money on its trash,” Rand says.

Of course, Wal-Mart, like every company, has a long, long way to go to become “green.” “I think it’s important for all businesses to recognize that they are not sustainable,” Rand says. For now, there are unavoidable tensions between the fundamental drive of Wal-Mart (and all companies) to sell more stuff, and the environmental imperative that we use less of everything that isn’t renewable. The only way out of that box is to redesign products and services so that they are truly sustainable–a gargantuan task.

In that context, the conversations around PSPs are intriguing. About half a million Wal-Mart employees have taken on their own sustainability projects. (Here’s a 2007 New York Times story about them.) Wal-Mart associates are carpooling, recycling, losing weight, exercising more, watching less TV, etc. For his part, Rand turns his food waste into compost for his garden—relieving him of the need to buy tomatoes from his employer, at least during harvest season.

It’s hard to know where all this will lead. At the very least, the involvement of thousands of rank-and-file employees create its own pressures for Wal-Mart to take sustainability seriously. There’s no turning back now.

Between the depressing crisis in the capital markets and the presidential campaign, which at least has the virtue of being entertaining, there’s almost no air left in the media climate for other stories to breathe, as Stephen Colbert, pointed out, amusingly, the other night on The Colbert Report. (When a special prosecutor was appointed to investigate the firing of U.S. attorneys, The New York Times buried the story with a single column headline on page 16.) And yet life goes on, really. Here are some stories from the world of business and sustainability that you may have missed:

Wal-Mart to dump (fewer) plastic bags: At the Clinton Global Initiative, Wal-Mart promised to reduce its global plastic shopping bag waste by an average of 33 percent per store by 2013. Other stores have been more aggressive in cutting back on plastic bags—Ikea is getting rid of them sooner—and some cities, led by San Francisco, are moving to ban them entirely. But because of its scale, Wal-Mart matters.

Matt Kistler, who leads the sustainability efforts at Wal-Mart, said in a news release: “If we can encourage consumers to change their behavior, just one bag at a time, we believe real progress can be made toward our goal of creating zero waste.” He said the company plans to eliminate 9 billion – billion! – plastic bags from existing stores. Among other things, Wal-Mart will offer reusable bags for 50 cents, train its staff to use fewer bags and decrease the amount of plastic going into each bag. (It will not, however, charge customers for plastic bags, at least not now.) The company said it will cut plastic bag waste by 50% outside of the U.S. and 33% in the U.S.—a sign, not that we needed it, that Americans can be counted on to be more wasteful than our neighbors.

The Environmental Defense Fund, which has a couple of full-time staffers working at WMT’s Bentonville, Arkansas, headquarters, helped the giant retailer develop its plan. Gwen Ruta, who oversees corporate partnerships at the business-friendly NGO, said, “Plastic bags clog our landfills, litter our roadways, harm sea turtles and other wildlife, and gobble energy in production.” She called on other retailers to curb plastic bag use.

Wal-Mart calculated that its efforts could reduce energy consumption by about 678,000 barrels of oil per year and reduce CO2 emissions by 290,000 metric tons per year – equivalent to taking more than 53,000 passenger vehicles off the road. The company is pushing ahead on other fronts to reduce packaging, notably by getting its suppliers to use less.

Enterprise promotes car sharing: The St. Louis-based rental car giant says it is expanding its business-to-business car sharing service, called WeCar, across America, after testing it in its home town. This pushes Enterprise closer into the space now dominated by Zipcar, with U-Haul and Hertz ready to follow, as USA Today reported.

For now, Enterprise’s WeCar will be available to corporate customers, governments and universities. The idea is to offer students or people who take public transit or car pool to the office a way to do errands easily and inexpensively during the day. The WeCar fleet is aimed at the environmentally conscious consumer; it’s primarily made up of hybrids and other fuel efficient cars. You can watch a video about WeCar here. Enterprise is currently offering the program at Washington University in St. Louis, Recreational Equipment, Inc. (REI) in Kent, Wash., and Google in Mountain View, Calif.

Enterprise is an impressive company. I wrote a column back in January about its efforts to “green” its fleet, promote renewable fuels and support environmental causes. Like Wal-Mart, Enterprise, which also owns the Alamo and National brands, is big enough to make a difference—it owns about 1.2 million cars.

Chipotle makes its own power: You know you can get tacos and burritos at Chipotle Mexican Grill but if you happen to live near Gurnee, Illinois, a small town midway between Chicago and Milwaukee, you can get a wind-powered meal, too. A six-kilowatt wind turbine on the site will generate about 10 percent of the store’s electricity, the company said this week. The stand-alone outlet also recycles its rainwater, uses super-efficient toilets and faucets, saves energy with LED lighting. The company says it will seek LEED certification from the U.S. Green Building Council.

Chipotle also has been working with suppliers to offer fresh, local food, as I wrote in a column a couple of years ago. The company even buys pork from perhaps the most famous organic farmer in America, Joel Salatin of Polyface Farm (who Michael Pollan profiled in The Omnivore’s Dilemma), as the Washington Post reported here.

What strikes me about Wal-Mart, Enterprise and Chipotle taking steps to become more sustainable is that they will never be mistaken for New England-based crunchy granola-type companies, like Ben & Jerry’s, Tom’s of Maine or Stonyfield Farms. They are mass-market companies, run out of the middle of the country, that reach people of all ages, races and classes. What they do has ripple effects. By their actions, they are saying that caring about the environment is important and that it’s good for business–even if they are likely to be overlooked in these otherwise extraordinary times.